FiatChrysler will ditch diesel from all of its passenger vehicles by 2022 amid a collapse in demand and spiralling costs in the latest blow to the scandal-tainted fuel source.

Under a four-year plan to be unveiled on June 1st, the Italian-American carmaker will say it intends to phase out the fuel type from the cars across its brands, according to people familiar with the strategy. The company, which owns the Jeep, Ram, Dodge, Chrysler, Maserati, Alfa Romeo and Fiat marques, declined to comment.

Fiat Chrysler Automobiles becomes the latest carmaker to ditch the fuel publicly, after Toyota said last year it would probably not launch another model with a diesel engine, while Porsche, which is owned by Volkswagen, last week announced it would drop the technology from its range.

Dieselgate

Once the dominant fuel source in Europe, diesel has seen its share of the market fall following the VW emissions scandal, rising political opposition to the fuel type and plans by several cities to ban it altogether.

For years governments and carmakers promoted diesel as a way of lowering carbon-dioxide emissions compared with those from petrol. But revelations in 2015 that Volkswagen fitted 11 million cars with software designed to deceive regulators about the vehicles’ pollution levels sparked a political backlash against diesel, with governments cutting incentives for the fuel and some expecting to ban it in the future.

Sales of diesel vehicles in Europe fell 8 per cent in 2017, taking its market share to 43.8 per cent, according to data from Jato Dynamics.

For FCA the decision to ditch the fuel comes amid rising costs of making the technology compliant with increasingly tight emissions rules. Industry estimates suggest that the cost of developing diesel engines that meet new European rules will be 20 per cent higher than in the past, making the cars less affordable for consumers.

Electric future

At the same time the costs of electric cars, which manufacturers increasingly need to sell to hit emissions targets, are coming down.

FCA has decided to pull diesel from all of its passenger cars but is expected to keep diesel options for its commercial vehicles, including a range of its pick-up trucks in the US, such as the popular Ram 1500.

FCA was the only big carmaker in Europe last year to see its share of diesel sales rise, in part because of its exposure to the Italian market, where demand for the fuel is still strong. In total, 40.6 per cent of cars sold by FCA in Europe were diesel, according to data from Jato Dynamics, up slightly from 40.4 per cent a year earlier.